Picking

Prices fell at most points Monday as the industry began picking up the pieces after the passage of Hurricane Ike. Notwithstanding major power outages in coastal areas of southeast Texas and southwest Louisiana and continuing massive shut-ins of offshore production, “it could have been worse” seemed to be the most common perception.

Picking up right where they left off late last week, January natural gas futures continued to scout lower price levels on Monday, even as winter storms simultaneously brought chilly temperatures to the Northeast and Northwest. The prompt-month contract touched a low of $7.060 in the regular session Monday before rebounding to close at $7.214, down 8.8 cents from Friday.

Chesapeake Energy Corp. is picking up 39,000 net acres of Barnett Shale leasehold in Johnson and Tarrant counties, Texas, 30 MMcfe/d of current production and $55 million worth of midstream assets in an $845 million cash deal with Four Sevens Oil Co. Ltd. and its partner Sinclair Oil Corp. Chesapeake also is spending $87 million to buy 28,000 net acres of leasehold in the same area from other sellers.

The Alaska Senate completed action Tuesday on its bill to reform state taxes on oil and natural gas, picking up two more affirmative votes on reconsideration for a 16-4 endorsement of a 22.5% net production tax on oil and 7.5%, or one-third of that, for natural gas. The bill has gone to the Finance Committee in the Alaska House and is expected to make it to the House floor by Monday.

As a blustery cold front continues to consume the eastern half of the U.S., natural gas futures on Monday appeared to be picking up where they left off on Friday — looking towards higher price levels. However, after January natural gas futures reached a high of $14.450 just before 1:20 p.m. EST, the prompt month dropped off, recording a low of $13.500 before settling at $13.660, down 27.1 cents on the day.

Picking up where last week ended, July natural gas futures continued to explore higher on Monday, breaking through the $7.02 high point from last week to notch a new high of $7.24.

Picking up right where the September contract left off, October natural gas futures on Tuesday made another run at the psychological $5 mark. While it was rebuffed on this day, some market participants said it now appears that the sub-$5 door might be open.

FERC turned up the heat last week on the whole subject of price reporting as Chairman Pat Wood urged companies to get on the bandwagon before it’s too late and staff issued another request for comments to see if people believe the price surveys are improving.

The biggest issue in natural gas price reporting today is the lack of liquidity, or low level of fixed price trading in the monthly market due mainly to the loss of the middleman marketers, price survey publishers told attendees at GasMart/Power 2003 Wednesday.